A third of unemployed Canadians left out of EI and the CERB, analysis says

Prime Minister Justin Trudeau holds a press conference to give an update from self isolation at Rideau Cottage in Ottawa to give an update on the government's response to COVID-19 outbreaks on Mar. 17, 2020. Andrew Meade/iPolitics

One third of unemployed Canadians will receive no income support from employment insurance or the federal emergency benefit, according to a new analysis from the Canadian Centre for Policy Alternatives.

An estimated 862,000 Canadians will receive nothing from EI or the Canada Emergency Response Benefit (CERB), predicts an analysis released Thursday that offers a picture of who is not covered by the safety net Ottawa has created for workers.

“There’s still people who are falling through the cracks,” said senior economist David Macdonald, who authored the study.

A total of 1.2 million Canadians were unemployed heading into the crisis. These jobless individuals have already been joined by an estimated 1.5 million people in layoffs from the COVID-19 pandemic.

The bulk of those missing out on the two programs — 604,000 Canadians in total — were jobless before COVID-19 hit Canada and can’t claim or qualify for EI. This is largely because they lacked the number of work hours needed to be eligible or did not work in the previous two years.

Macdonald said these individuals would include those facing a long bout of unemployment, returning from parental leave, some self-employed workers and those recently off EI benefits but faced with no job opportunities.

Since these individuals did not lose their job due to COVID-19, they are also excluded from the CERB, which will provide $2,000 every four weeks for Canadian who have seen their income shrink to zero due to the crisis.

Another 257,000 Canadians who lost their jobs due to the pandemic won’t benefit from the CERB, largely because they do not meet the requirement of proving $5,000 in income in 2019 or in the 12 months before they were laid off.

“That’s certainly something that could probably be lowered,” Macdonald said.

He said it includes a lot of part-time and seasonal workers in food, hospitality and retail sectors. The analysis also assumes about 3 per cent of eligible people won’t apply for the CERB due to a lack of knowledge and other application difficulties, based on past patterns for EI applications.

Those who are unemployed before the crisis but weren’t interested in applying for EI, such as those about to retire or receiving severance, were excluded from the 862,000 figure.

Macdonald also warned that an estimated 34,000 people receiving provincial social assistance who have lost work due to COVID-19 may face a complete clawback of any CERB payment without changes.

Speaking at a news conference Thursday morning, Prime Minister Justin Trudeau said the government is looking at ways to “help everyone in Canada that needs it.”

“We know that there are many vulnerable people who won’t be able to access the support, who will need extra help,” Trudeau said.

Employment Minister Carla Qualtrough said Wednesday that 2.1 million EI applications were received in the last two weeks. Macdonald said unemployment may increase beyond 2.7 million in the days ahead.

“At first I thought that this 2.7 million unemployed figure was the worst case, and then I thought it was realistic, and now I think it might actually be optimistic,” he said.

Macdonald’s analysis also estimated 14 per cent of unemployed people — 390,000 Canadians in total — would receive less than $500 a week in support from EI benefits.

He said the solution would be to introduce a floor for minimum EI benefits payments equal to the CERB. EI regular and sickness benefits provide 55 per cent of one’s income to a maximum of $573 a week, meaning those with low incomes would not receive close to the ceiling amount.

Macdonald, however, noted that 1.3 million of the 1.5 million Canadians laid off since mid-March will likely receive the CERB. Many of them will also receive a more generous amount than EI benefits. Approximately 459,000 unemployed workers will be receiving support through EI.

The analysis does account for the number of temporary foreign workers and undocumented workers who have been laid off recently. As well, it does not capture students entering the summer seasonal job market, where employment opportunities will be virtually non-existent.

Unless working students were laid off due to COVID-19, and earned $5,000 in income recently, they will not have access to the CERB benefit.

Macdonald also said the federal wage subsidy will do little to help the unemployed without access to EI or the CERB given that many were already out of work and don’t have a job to return to.